Federal Court of Australia

Vita Group Ltd, in the matter of Vita Group Ltd (No 2) [2023] FCA 623

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) (Act), the scheme of arrangement between the Plaintiff and its shareholders, the terms of which are set out in the document at Appendix 3 of the document comprising Exhibit P1 in the proceeding, is approved.

2.    The Plaintiff lodge with the Australian Securities and Investments Commission a copy of the approved scheme of arrangement at the time of lodging a copy of these Orders.

3.    Pursuant to s 411(12) of the Act, the Plaintiff is exempted from compliance with s 411(11) of the Act in relation to Order 1.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

JACKMAN J

1    These are my reasons for the orders which I made at the second Court hearing, approving the scheme of arrangement (Scheme) which was the subject of my reasons for judgment in Re Vita Group Ltd [2023] FCA 400. In that judgment, I outlined the way in which scheme applications should be approached at the first Court hearing, bearing in mind the overarching purpose of the civil practice and procedure provisions of facilitating the just resolution of disputes according to law, as quickly, inexpensively and efficiently as possible. As I said in that judgment, although scheme of arrangement applications are usually conducted on an ex parte basis, without a contradictor, and thus may not be regarded as “disputes”, I regard the overarching purpose identified in s 37M of the Federal Court of Australia Act 1976 (Cth) as equally applicable to the present context.

2    The plaintiff has maintained its commendable approach to the efficient conduct of the present application. The evidence on which it relied at the second Court hearing consisted of a very short affidavit by the Chief Legal and Risk Officer and Company Secretary of Vita (annexing the results of the poll taken at the scheme meeting and the ASX announcement advising the details of the second Court hearing, and proving that the board of Vita declared the Permitted Dividend), together with the tender of conditions precedent certificates to the effect that all conditions precedent had been satisfied or waived, and a letter from the Australian Securities and Investments Commission (ASIC) pursuant to s 411(17)(1)(b) of the Corporations Act 2001 (Cth) (the Act) stating that ASIC had no objection to the scheme. The poll taken at the scheme meeting demonstrated that the statutory majorities were comfortably satisfied with the approval of 98.24% of the votes cast and 86.60% of Vita shareholders present and voting. I note that the plaintiff’s succinct written submissions amounted to less than three pages. All statutory requirements have been met and there is no reason why the Scheme should not be approved.

3    In the following paragraphs, I set out my views as to the lack of necessity or desirability of certain items of evidence which have conventionally been included in the evidence relied upon at the second Court hearing in recent years.

4    The first such topic is evidence as to the explanatory statement and accompanying material having been dispatched in accordance with the orders made by the Court at the first Court hearing. This has frequently taken the form of an affidavit by the responsible person at the plaintiff company’s share registry. In my opinion, it is completely unnecessary. The Court is entitled to assume that its orders have been complied with, except to the extent that evidence is given as to any areas of non-compliance. If there are any areas of non-compliance, then that ought to be brought to the Court’s attention, and relief under s 1322 of the Act is routinely granted in such cases. Similarly, the Court is entitled to assume, in the absence of evidence to the contrary, that the explanatory statement was registered with ASIC after the first Court hearing and before dispatch to members, and that the orders made at the first Court hearing have been lodged with ASIC.

5    Another matter is whether notice has been received by the morning of the second Court hearing of any intention to appear by any party objecting to approval of the scheme. I do not regard such an affidavit as necessary. It is sufficient for counsel appearing for the plaintiff to tell the Court at the hearing if there has been any such notice.

6    Another topic is evidence of shareholder participation by way of percentages by number of shares and headcount of the shareholders who cast a vote compared to the total number of shares on issue and shareholders. That evidence has been sought by some judges in recent years, but in my opinion it is both irrelevant and unnecessary. The evidence that is relevant in a proceeding is evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding: Evidence Act 1995 (Cth), s 55(1). Apart from the most highly exceptional circumstances, it is difficult to identify a fact in issue in an application for approval of a scheme of arrangement which could rationally be affected by evidence of voter turnout, and those highly exceptional circumstances would have to be disclosed to the Court in any event on an ex parte application. The Court cannot, and should not, assume that shareholders who did not participate either in person or by proxy did not have notice of the meeting, nor can their silence be taken as opposition to the scheme: Re Professional Investment Holdings Ltd (No 2) [2010] FCA 1336 at [7] (Jacobson J). The apathetic shareholder who chooses not to vote should not be presumed to be antagonistic to the scheme or to warrant paternalistic protection, which is why the voting test for schemes is by reference to shareholders “present and voting” (not by reference to the total issued capital or total shareholders of the relevant class, in contrast to compulsory acquisition under a conventional takeover): Re Matine Ltd (1998) 28 ACSR 268 at 295 (Santow J), cited with approval in Re Seven Network Ltd (No 3) [2010] FCA 400; (2010) 267 ALR 583 at [61] (Jacobson J). Provided the statutory majorities required by s 411(4) of the Act are satisfied, it is irrelevant whether the voter turnout was high, low or middling. Apathy or indifference by shareholders is immaterial to the Court’s decision whether to approve the scheme.

7    The poll report provides sufficient evidence of whether the statutory majorities have been met. There is no need for evidence as to the receipt of proxy forms and the collation of proxies unless there is a significant issue which must be brought to the Court’s attention.

8    A further topic is the conduct of the scheme meeting itself. In recent years, the chairperson of the meeting has often been put to the trouble of proving what was said at the meeting, including questions put and answers given. In my experience, this is wasteful and irrelevant. If there is a point of significant legal principle raised at the meeting, it must be disclosed under the plaintiff’s ex parte obligations, but otherwise this evidence should be omitted.

Associate:

Dated:    9 June 2023